Sunday, November 4, 2012

2012 Nobel Prize for Economics

Here's a reprint of the post that Adam Buick, contributor to Life Without Money, wrote for the Socialism of Your Money Back blog (16 October 2012):

Sometimes the Nobel Prize for Economics is awarded to someone who has made a useful contribution rather than providing ideological justification for some government policy within capitalism.

For instance, in 1998 it went to Amartya Sen whose work had shown that famines are not caused by an absolute shortage of food but by a collapse in the ability of some people to buy or exchange something for food. In 2009 it went to Elinor Ostrom, whose research exposed the myth of “the tragedy of the commons” by showing that in practice where commons existed they had been managed by the community and did not break down through the self-defeating selfish behaviour of those have access to them.

This year this prize has between awarded to two people, one of whom denies that he is an economist, for the study of transactions “where price is not an issue”. Something that could be socially useful as socialism will be a society where price won’t be an issue

According today's the Times:

“Their studies helped to improve efficiency in markets where price was not an issue, matching doctors to hospitals, students to dorm rooms and organs to transplant patients.It led ultimately to the creation of kidney exchanges, where donors could save a relative even where there was no biological match. In essence, a husband wanting to save his wife by donating a kidney but whose blood is not compatible instead donates to a stranger, whose own relative donates back to the man's wife.Such matching arrangements are essential in most Western countries where organ-selling is illegal, and the free market cannot do the normal work of resource allocation.”

and

“Professor Shapley, who is 89, began the theoretical spade-work in the 1950s and 1960s, using game theory to analyse different matching methods. In the 1990s, Professor Roth, now 60, working independently, applied similar theories to more practical matters, helping to allocate student doctors to particular hospitals and later providing the theoretical underpinning to streamline organ donation. Professor Roth is regarded as an authority on a field known colloquially as ‘repugnance economics’ — in essence, the study of transactions where the application of the price mechanism is regarded as morally repugnant, such as the sale of body parts, sperm and eggs, prostitution and even dwarf-throwing.”

''Repugnance economics", is that the socialist answer to the "Economic Calculation Argument"?

Adam refers us to the Economist's View blog too, where Arindrajit Dube has a post, 'A Nobel for planning'?, which explores how, confusingly, 'exchange' has come to mean both market and non-market activities.